By John Schaffner
Atlanta Mayor Shirley Franklin unveiled April 30 a $541 million proposed budget for the coming fiscal year, which starts July 1, and her plan includes raising property taxes to collect an additional $56 million.
Some Atlanta City Council members indicated they are willing raise property taxes, especially because the budget would end city worker furloughs and put the city’s public safety force — police officers and firefighters — back to what was full strength last year at this time.
However, city officials, civic leaders and some of the folks who hope to become mayor in January say City Hall needs a long-term diagnosis for Atlanta’s financial health.
“We are fighting for our survival,” City Council President Lisa Borders, a mayoral candidate, said during a council retreat May 1.
At least one candidate for mayor this fall, City Councilwoman Mary Norwood of Buckhead, clearly stated opposition to the Franklin budget: “Now is not the right time to raise the tax burden our hardworking families pay to City Hall.”
Franklin said the city needs the tax increase because revenue from sales taxes and other fees is far below past levels, thanks to the ongoing recession. Twenty percent of the city money comes from sales taxes. Fees from the city’s hotel and motel tax is down, as is revenue from building and licensing fees. The city has few major revenue options.
City revenues have dropped by $14 million since 2007, which is partially responsible for service cuts — such as closing fire stations and nearly two dozen recreation centers — and layoffs of several hundred employees.
Property taxes represent the largest chunk of the city’s revenue — 28 percent — but that’s lower than other similarly sized cities. More than 60 percent of Charlotte’s revenues come from property taxes.
City officials often note that about one-half of the property taxes homeowners pay go to the Atlanta school system, while one-quarter of the money goes to City Hall.
That is little comfort to groups like the Fulton County Taxpayers Foundation, which has opposed any tax increase. The organization has pushed the city to consider outsourcing city services to get the same level or better results for less money. Franklin has been cautious in outsourcing services.
The proposed tax increase amounts to an additional $236 a year — or nearly $20 a month — for the average city homeowner, according to city officials. The average Atlanta home is valued at $239,500. The owner of a home valued at $1 million, of which there are many in Buckhead, would pay $1,161 more in property taxes.
A major problem with the Atlanta budget is employee pensions. Nearly one-fifth of Franklin’s $541 million proposed budget is devoted to pensions. The city’s annual contribution to its three pension plans has nearly tripled from $36.6 million in 2003 to its current level of $100.3 million.
After years of underfunding the pension plans, the City Council this decade approved several changes to its pension contributions, resulting in higher annual obligations.
The mayor’s budget includes spreading out payments to the city’s pension plan over a longer time period, which she said could save Atlanta at least $19 million over the next year. It also includes cutting the city’s corrections budget in half from $38.5 million to $19 million. Her staff has said it is open to negotiations to sell the city jail to Fulton County.
Even before council received the mayor’s budget, Councilman Howard Shook had predicted his fellow council members would be willing to go along with a tax increase this time around. He said the change among some council members is because of their desire to end four-hour-a-week furloughs imposed on city workers in December.
Homeowners have complained that the furloughs threaten public safety with police officers and firefighters working fewer hours. The furloughs would end under the mayor’s plan.
“A property tax increase wouldn’t get very far if it wasn’t going to enhance public safety by ending the furloughs,” said Shook, who chairs the council’s finance committee.
But Shook, a fiscal conservative whose district includes many of Atlanta’s wealthiest neighborhoods, has indicated he is reluctant to vote for a tax increase.
“With a budget in excess of a half-billion dollars, we have the dollars we need to fund our priorities: cops on the beat, fire stations open 24/7, and an end to the furloughs,” Norwood said in an e-mail to supporters. “We have enough money to promote jobs, protect neighborhoods, enforce property codes and alleviate traffic congestion hotspots. But we have to prioritize. We have to make choices.”
Norwood said her choice is to “fund the must-haves like police and fire. Only when we’ve funded our real priorities do we fund the other things that are nice to have.”
She added: “I cannot vote for this tax increase.”
The mayor has said she might continue the furloughs if the tax increase is not passed.
The council must approve the budget by June 30.